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Talk of Takeover Follows Trouble at India's Satyam Computer Services

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Troubles continue to multiply for Satyam Computer Services, India's fourth-largest outsourcing company.

 

Last week, the World Bank revealed it had imposed an eight-year ban on doing business with Satyam, citing problems including inappropriate benefits given to bank staff and improper documentation of its contracts with subcontractors.

 

Because I wasn't working the day after Christmas, I initially missed this story. When a colleague brought it to my attention, I speculated that Satyam could become an acquisition target, perhaps for a multinational services provider like IBM or Accenture. That's the angle being reported by Reuters, which notes that Satyam has employed Merrill Lynch to help it determine how best to boost the company's value for shareholders.

 

The company's stock price plummeted on both the New York Stock Exchange and India's Bombay Stock Exchange after shareholders balked at a $1.6 billion deal to acquire construction and real estate companies backed by Satyam Chairman B. Ramalinga Raju and his two sons. Following the aborted deal, four members of the company's board of directors resigned, reports The Hindu.

 

Satyam's stock rose 9 percent on Indian exchanges yesterday, thanks to the takeover talk, according to a story in The Economic Times.

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